The paragraph is from the opening of the Everest Group, Ltd.'s first quarter 2025 earnings conference call. It includes introductions by Matthew Rohrmann, Head of Investor Relations, and Jim Williamson, President and CEO. The call is being recorded and contains forward-looking statements, as well as non-GAAP financial measures. Jim Williamson acknowledges the significant catastrophic events of the quarter, such as the California wildfires and aviation losses, which elevated the combined ratio to 102.7%. Despite the financial impact, Everest's losses are within expected ranges, demonstrating strong underwriting and risk selection.

The article discusses the current state of the insurance group's operations, highlighting a stable total group written premium of $4.4 billion with strategic growth and shrinkage based on risk-adjusted returns. While attritional loss ratios remain on track due to disciplined underwriting, reinsurance premiums have increased, particularly in property lines, despite some reductions in casualty. The group's property book has seen growth, especially in April, driven by strong relationships with Japanese clients, while facing moderate pricing pressure for catastrophe insurance in 2025. Conversely, casualty premiums have decreased by nearly 22% due to strategic portfolio adjustments, as the market is saturated with unprofitable risks. The group continues to maintain expectations for aviation losses.

The paragraph discusses the company's reinsurance and insurance divisions. In the reinsurance division, a conservative approach added 2.4 points to the overall loss ratio for anticipated losses, maintaining an attritional loss ratio of 57.4%. Major losses were due to the California wildfire, with potential subrogation recoveries not yet factored in. In the insurance division, written premiums decreased by 1.3% due to a decline in the third-party book, offset by growth in property and specialty businesses. A remediation plan for the U.S. casualty portfolio is leading to a significant non-renewal of written premiums, with casualty rate increases outpacing loss trend assumptions. The company anticipates peak remediation from Q4 2024 to Q2 2025, aiming for completion by Q4. Despite declining property pricing in the U.S., market pricing is viewed as adequate. The international insurance business is performing well, achieving growth and profitability while continuing to invest in people and technology.

The paragraph discusses the financial performance and strategies of Everest in their insurance and reinsurance businesses. The insurance sector saw a stable attritional loss ratio, driven by an improved underlying loss ratio and prudent risk margins. The reserve position has improved since late 2024, with strong results in international markets and aligned loss experience in North America. Significant risk margins in 2025 loss picks are anticipated to strengthen reserves. In reinsurance, property lines show favorable loss development, while casualty remains stable. The company repurchased $200 million in shares, maintaining focus on shareholder value through buybacks. Everest is monitoring potential impacts from the new tariff regime and inflation, ready to adjust as needed.

In the first quarter of 2025, Everest achieved an operating income of $276 million despite facing significant catastrophe losses, particularly from California wildfires. While gross written premiums were $4.4 billion, representing a 2% decrease in constant dollars, the combined ratio was 102.7% due to catastrophe losses adding 13.9 points. The company saw an increase in the Group's attritional loss ratio, largely due to aviation losses and a conservative approach in U.S. casualty lines. The commission and expense ratios were stable, with the latter at 6.2% due to investments in talent and systems. Reinsurance gross premiums saw a slight decrease, with the segment's combined ratio affected by 18 points of catastrophe losses compared to only 2.9 points in the prior year.

In the recent quarter, the company faced $442 million in CAT losses primarily due to California wildfires, with $62 million attributed to reinstatement premiums. The attritional loss ratio rose to 59.8% due to factors including $61 million in aviation losses, leading to an overall attritional combined ratio increase to 87.1%. While there was slight improvement in the commission and underwriting-related expense ratios, gross premiums written remained steady at $1.1 billion. Growth in property and specialty lines was offset by reductions in specialty casualty lines, now comprising 25.1% of the insurance segment, down from the previous year. The attritional loss ratio for the segment increased to 68.8%, with $6 million in aviation losses. The company is taking disciplined underwriting measures, achieving nearly 20% average rate increases in U.S. casualty lines, aligning with their actuarial central estimate for losses.

The insurance division is on track to release its global loss triangles in June, with a stable reserve position. This quarter, the combined ratio accounted for 1.1 points of catastrophe losses due to California wildfires, unlike last year's milder period. The commission ratio rose by 40 basis points owing to business mix changes, while the underwriting expense ratio increased to 18.1% due to ongoing global platform investments and slower premium growth as the U.S. casualty portfolio is adjusted. The new segment, focused on sports and leisure, is meeting expectations with a small and conservative contribution. Net investment income rose to $491 million, driven by larger assets under management, although alternative asset income decreased compared to the previous year. The portfolio's book yield held at 4.7%, with a reinvestment rate above 5%. Asset duration is short at 3.3 years, and the fixed income portfolio holds a strong average credit rating of AA minus. Despite global economic uncertainty, the conservative portfolio is well-positioned, with minimal exposure to tariff-impacted investments.

In the first quarter of 2025, the operating income tax rate was 16.1%, lower than the expected 17-18% due to the mix of profits by jurisdiction. Shareholders' equity was $14.1 billion, or $14.7 billion excluding $561 million of net unrealized depreciation on available-for-sale fixed-income securities. Cash flow from operations totaled $928 million. The book value per share rose to $332.39, a 3.5% increase from the end of 2024, or $345.57 excluding depreciation, up 80 basis points. The annualized total shareholder return was 5.6%, and net debt leverage decreased to 15.4%. The company repurchased 574,000 shares for $200 million. They plan to continue buybacks throughout 2025, assuming normal catastrophe activity.

In the paragraph, Jim Williamson discusses the potential for growth in the insurance market, specifically in relation to the 06/01 renewals in Florida and nationwide. He anticipates increased demand, with clients interested in purchasing more limits, which could positively affect prices. Despite the competitive market, particularly within Lloyd's, Williamson sees growth opportunities, notably in specialty lines, both in reinsurance and insurance. There is an acknowledgment of increased competition following the market corrections after the Ukraine conflict, but overall, Williamson remains optimistic about the opportunities in specialty underwriting areas.

The paragraph discusses a company's growth prospects and capital allocation strategy. The company sees strong growth opportunities in areas like engineering, marine, aviation, insurance, and specialty lines, with attractive margins. Despite some pricing adjustments, rates remain favorable to continue growth. Alex Scott from Barclays inquires about the company's ability to balance growth and share buybacks. Mark Kociancic responds, stating that the company has the capacity to pursue both strategies. They have sufficient capital to support their operating plan and see share buybacks as an attractive opportunity due to the current share price.

The paragraph discusses the strategy and outlook for a company's casualty reinsurance business. It mentions that while the overall market pricing remains strong, the company evaluates its quota share partners based on multiple factors beyond pricing, such as portfolio management, claims handling, and distribution strategy. If the expected loss ratios exceed available economics in a deal, they choose to walk away. Since January 2024, the company has moved away from $800 million in casualty premiums exposed to North America but has grown in areas where partners are performing well. Additionally, there is a mention of a $200 million share buyback in Q1, with opportunities for further buybacks throughout the year.

The paragraph features a conversation between Gregory Peters from Raymond James and Jim Williamson about the current pricing pressures in the reinsurance market, especially regarding property schedules. Gregory is trying to reconcile the company's growth targets with reports of significant rate rollbacks in the market. Jim responds by noting that while there was a substantial rate increase in the U.S. treaty property book at the start of 2023, there have been slight decreases in rates since then, as seen in the 4/1 renewals in Japan and other areas. Jim clarifies that Gregory's focus is primarily on reinsurance, despite some overlap with insurance.

The paragraph discusses the interest of carriers in the reinsurance business due to healthy expected returns despite a correction in rates. The speaker is willing to continue investing capacity and capital in this sector as it remains profitable and expects this trend to continue through 2025. In the insurance market, despite some rate decreases, conditions remain attractive for growth, especially internationally where the pricing pressure is less than in the U.S. The speaker highlights the significant growth in the insurance business, particularly internationally, driven by exceptional expected returns. The final part of the paragraph briefly mentions a wildfire loss reported by Edison International related to the Eaton Fire.

The paragraph discusses a conversation between Jim Williamson and Gregory Peters regarding the California wildfire fund and its potential impact on Everest Financials through reinsurance. Williamson explains that any recoveries, such as subrogation recoveries from their clients, could benefit them but notes they are not currently factoring these into their financials, as such processes take a long time. Gregory Peters asks if they would consider selling subrogation rights, to which Williamson replies it's not a current consideration but has been done in the past depending on circumstances. The conversation then shifts to Josh Shanker's question about flat insurance premiums. Williamson is asked about the mix of business maintaining a flat premium, with Shanker noting it's a good outcome given Everest's one renewal strategy.

The paragraph discusses the state of a company's insurance business, particularly focusing on U.S. casualty, where half of the premium up for renewal wasn't renewed, equating to about $150 million. Despite this, there's significant rate improvement and new business, though lower than the previous year, is high quality and well-priced. Specialty lines in North America and international business in the U.K., Europe, and Asia are growing well. Other areas like workers' compensation and financial lines are stable or slightly dropping. Overall, the company is optimistic about the quality and future of its business. Additionally, Josh Shanker comments on the company's $200 million share repurchase, noting it represents only about 2% of daily share volume, suggesting more could have been done.

In the paragraph, Mark Kociancic discusses share buybacks, noting that their ability to perform buybacks in the first quarter was limited due to having material non-public information after a reserve charge in January. They were comfortable with a $200 million buyback in the first quarter and see it as a starting point for the year. The company's growth rate has slowed due to casualty, reinsurance, and insurance factors, allowing for additional retained earnings for buybacks. Despite a strong capital position, they're cautious about the upcoming hurricane season, which might cause a pause in buybacks in Q3, but expect a significant amount in 2025. Josh Shanker appreciates the transparency, and Meyer Shields asks about responding to tariffs affecting existing policies.

In the paragraph, Jim Williamson discusses how inflationary pressures, both social and material, prompted his team to increase the frequency of assessing loss trend assumptions to quarterly, and even within quarters, to respond swiftly to any signs of increased expectations. This approach allows them to manage inflation's impact on open claims and ensure robust reserve decisions for 2024 by incorporating a strong risk margin into their projections. Williamson feels confident about their preparedness in handling inflationary pressures due to this strategy. Meyer Shields then shifts the conversation to mid-year renewals, inquiring about the anticipated increase in demand and how it might affect pricing dynamics at lower and higher layers of coverage.

In the paragraph, Jim Williamson discusses the challenge of meeting demand for insurance coverage, particularly at lower levels due to high pricing that many are unwilling to pay. He notes that demand is typically higher at the top end where clients want protection against exceeding their programs. Elyse Greenspan from Wells Fargo then asks about a recent aviation loss. Williamson responds by estimating the industry loss at around $1 billion, noting it lacks the detailed modeling seen with events like hurricanes. He mentions their reinsurance book bore most of the loss, valued at a few hundred million dollars, and highlights its strong past performance post-Boeing losses.

The paragraph features a conversation between Elyse Greenspan, Mark Kociancic, and Jim Williamson regarding the financial performance and strategies related to insurance and reinsurance portfolios. Mark Kociancic explains the significant reduction in gross written casualty premiums, particularly on the reinsurance side, and indicates that while there is a noticeable drop in top-line premiums (25-26%), the reduction in net earned premiums is less drastic (approximately 11%). This situation mitigates the impact on the business mix over time, slowing the anticipated business improvement. Elyse Greenspan asks about the company's exposure to aviation losses, noting a 7-8% share, and questions whether their exposure is higher than typical. Jim Williamson responds, without providing specifics, implying acknowledgment of the situation.

The paragraph discusses a Q&A session where Elyse Greenspan expresses appreciation for information provided about a reinsurance event related to an aviation loss. Jim Williamson responds confidently about their reinsurance approach. David Motemaden from Evercore ISI then asks about the reinsurance attritional loss ratio, noting a perceived stall in its improvement, excluding the aviation loss. He inquires if this is due to conservatism on the casualty side. Mark Kociancic confirms that the primary issue is the risk margin on the casualty side, which is influencing the difference in the attritional loss ratio, apart from the highlighted aviation loss.

In the paragraph, David Motemaden and Jim Williamson discuss the property catastrophe insurance business. Jim indicates that while pricing is moderating, it's still attractive and does not wish to speculate on how much price reduction the market can bear without affecting returns. He emphasizes the need for pricing discipline to maintain sustainable returns, especially given the volatility in the market, such as the recent California wildfires. Jim wants the industry to maintain current price levels for sustainability. Following this, Michael Zaremski asks about the frequency of reserve reviews in the business, suggesting a different schedule than the typical annual review for each line-of-business.

In the paragraph, Jim Williamson clarifies that there has been an increase in the frequency of reviewing loss trend assumptions due to tariffs, although the annual reserve deep dives and quarterly processes remain unchanged. Mark Kociancic adds that there is heightened awareness and alertness regarding U.S. casualty lines to improve quarterly estimations of liabilities. He expresses confidence in the current insurance reserves. Michael Zaremski asks about the funding for higher-than-expected share repurchases and their connection to increased federal home loan bank (FHLB) borrowings. Kociancic explains that the buybacks are funded by excess capital, not FHLB borrowings, which are used for a spread trade strategy involving fixed-rate borrowing and investing in higher-yielding securities.

The paragraph features a discussion between Michael Zaremski, Mark Kociancic, and Jim Williamson, along with a question from Katie Sakys of Autonomous Research. Michael Zaremski confirms with Mark Kociancic that the financial details being discussed are reflected in investment income. Katie Sakys inquires about changes in the property catastrophe (cat) portfolio, specifically regarding an increase in charges for European catastrophe exposures and whether this trend could apply globally. Jim Williamson responds by explaining that their decision to increase charges was based on significant changes in European weather patterns that weren't properly accounted for in existing models or market pricing. Consequently, they decided to reduce their exposure to the European cat business unless they received suitable compensation. He notes that, for now, this assessment is specific to Europe and emphasizes the importance of staying updated with underlying developments by investing in robust internal modeling capabilities.

The paragraph is a discussion between Katie Sakys, Jim Williamson, and Mark Kociancic about their company's assessment of loss costs and reserves. Jim Williamson mentions that they are constantly updating their models with the latest data but have not seen dramatic changes in loss expectations, especially compared to European catastrophic events. Mark Kociancic adds that the company's reserve bookings are performing well against actuarial estimates, providing a comfortable margin. Additionally, Jim Williamson notes that they do not anticipate any significant changes in terms and conditions or attachment points for property reinsurance heading into mid-year renewals.

In the paragraph, Jim Williamson discusses the importance of maintaining discipline in terms and conditions, which has contributed to a more sustainable market. He notes that the returns on capital for their businesses are improving, driven by attractive market opportunities and positive economic fundamentals. Brian Meredith acknowledges this response, and the operator then concludes the question-and-answer session.

This summary was generated with AI and may contain some inaccuracies.